May 12 (Reuters) – EBay on Tuesday rejected an ambitious $56 billion takeover bid from the much smaller GameStop on doubts over the financing of the deal, while underscoring its turnaround efforts that have boosted its growth. The rejection could lead to a hostile bid as GameStop CEO Ryan Cohen had last week said he […]
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EBay rejects GameStop’s audacious $56 billion takeover bid
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May 12 (Reuters) – EBay on Tuesday rejected an ambitious $56 billion takeover bid from the much smaller GameStop on doubts over the financing of the deal, while underscoring its turnaround efforts that have boosted its growth.
The rejection could lead to a hostile bid as GameStop CEO Ryan Cohen had last week said he was willing to take the offer directly to eBay shareholders.
Analysts and investors have doubted whether the half-cash, half-stock bid from the $12 billion videogame retailer for a company nearly four times its market value would close. EBay stock has been trading $20 below the offer price of $125 per share.
The approach has also irked some GameStop investors. Following the bid, Michael Burry of the “The Big Short” fame sold all his shares in the company.
Calling the deal strategy “pedestrian”, Burry, who once likened GameStop CEO Ryan Cohen to Warren Buffett, warned about the debt load and shareholder dilution.
Cohen is betting on replicating his cost-cutting playbook at GameStop to boost eBay’s profitability, while tapping GameStop’s around 1,600 U.S. stores into a physical ​network to make eBay a better competitor to Amazon.
He has also touted $20 billion in potential debt financing from TD Securities and GameStop’s ability to issue stock to fund the deal.
(Reporting by Aditya Soni in Bengaluru; Editing by Arun Koyyur)